A 401(k) is an important way to save for your golden years. While many Americans have heard of 401(k) plans because it is part of their employer’s benefits package, few have heard of a self-directed 401(k) plan. These two types of accounts are similar in many ways. However, a self-directed 401(k) plan provides you with more investment options, flexibility and control. Because you have more types of investment possibilities, you are able to not only diversify your portfolio more but also help prevent economic downturns from destroying your retirement funds. Sounds great, doesn’t it? As with your employer’s 401(k) plan, a self-directed 401(k) often relies on contributions. If you are interested in learning more about contribution regulations for a self-directed 401(k) plan work, keep reading!ContributionsJust like the 401(k) plan offered by your employer, the Internal Revenue Service (IRS) allows for you to make elective contributions. Elective contributions are funds, as directed by you, which are withheld from your paycheck and applied directly to your 401(k). These funds are withheld before taxes are taken from your check. The IRS dictates how much you can contribute to your 401(k). For the most part, the IRS regulations fall into two groups: those that apply to people under 50 and those for individuals who are 50 or older.Participants Under 50In 2018, if you are under 50, the IRS has set the allowable maximum contribution limit for 401(k) accounts at $18,500. (This is $500 more than they allowed in 2017.)For those who are under 50, a defined contribution of $55,000 from all sources is permitted.Participants 50 And OverIf you are 50 or older, you are permitted to invest “catch-up” contributions up to $6,000. (Catch-up contributions are additional elective contributions.)That gives individuals over 50 the ability to makes a maximum of $24,500 elective contributions to their 401(k). In other words, those who are over 50 can elect to contribute $6,000 on top of the $18,500 allowable by the IRS.For those who are 50 or older, the total allowable defined contribution from all sources is $61,000.Contribution SourcesYour contributions typically consist of two types of discretionary fund sources. The contributions that come directly from your salary are often referred to as personal deferrals. When you opt to have your contributions taken from your salary before they are taxed, you are investing in a traditional 401(k) account. Should you opt for contributions to be made after taxes have been removed from your paycheck, you now have a Roth 401(k). Profit sharing, the other type of funding source, refers to those contributions made by your employer. Want to Learn More?Self-directed 401(k) accounts are not often offered by your employer’s selected firm. However, Royal Legal Solutions can help. Our expert financial managers can help explain the ins and outs of a self-directed 401(k) as well as how you can start one today and regain total control of your retirement investments.